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Hedgewise FAQ
Posted in FAQ on 2014-09-24

What does Hedgewise do?

Our mission is to create investment products that drive higher and more predictable returns for clients by solving structural inefficiencies in the marketplace. We are a bit like an ETF provider, but we utilize a unique account structure to build in a number of additional benefits to our products.

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How much does it cost?

We charge a fee based on assets under management of between 0.5% and 0.7% annually, with an absolute minimum fee of $19.99 per month. For most clients, this fee includes the cost of all trading commissions.

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What makes Hedgewise different?

Hedgewise offers a unique set of products that are built to solve particular inefficiencies in the current investing landscape. For example, one of our products is based on an institutional approach to passive investing that has been inaccessible to most investors. Another of our products is built to provide a far more effective way to invest in oil over the long-run. Generally, each of our products has some key structural advantage compared to the competition.

Traditionally, investors must pay an annual fee to an ETF or mutual fund as well as trading commissions to their brokerage. With Hedgewise, clients pay a fee that is similar or less than competitive funds which also covers all trading commissions. In addition, many of our products include other benefits, such as tax optimization or risk customization. We believe this presents a compelling value proposition for our clients which we are able to offer due to our unique account structure.

Where is my money managed?

Hedgewise chose Interactive Brokers, an unaffiliated third-party brokerage, to be the custodian for all client accounts and to execute all of a client's trades. This gives you full transparency on exactly where your money is and how it is being invested. Interactive Brokers was rated the best online broker by Barron's in 2015.

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Who can sign-up?

Hedgewise is currently accepting new customers by invite only and has a limited number of client openings. We accept accounts as small as $10,000 and work with individuals, investment advisers, and family offices. You can request an invitation here.

What kinds of accounts does Hedgewise manage?

Hedgewise manages Traditional, Roth, Rollover, and SEP IRAs, as well as trusts and taxable accounts. Hedgewise does not manage 401k's, but is happy to assist with 401k rollovers.

How does it work if I want to become a client?

After receiving an invitation to sign-up, you must open an account with Interactive Brokers and then provide Hedgewise with the appropriate account authorizations. Hedgewise is happy to assist with the account opening and asset transfer process. Once open and authorized, Hedgewise manages your account by executing trades on your behalf. Clients can see their performance in real-time and make adjustments to their account via their personal Hedgewise Dashboard.

Does Hedgewise provide tax and cost optimization for my portfolio?

Yes, Hedgewise builds in tax and cost optimization to every product which takes into account each client's individual situation.

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What are derivatives and when does Hedgewise need to use them?

Hedgewise may uses derivatives, such as options or futures contracts, as the underlying instruments in some of its products. These can have a variety of uses, from lowering expected costs, to hedging certain risks, to building in leverage for clients where specifically desired.

For our products that use derivatives to create leverage, you can generally find a link to a more detailed document on the product overview page that explains exactly when leverage is used and how it is created. Clients can read more about the additional specific risks associated with the use of leverage in our Form ADV.

Who is behind Hedgewise?

Hedgewise is owned and run by Lee Tobey, a Registered Investment Adviser who worked previously at one of the largest hedge funds in the world and as a management consultant for Fortune 50 companies.

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Why should I trust my money with Hedgewise?

Any money invested with Hedgewise is held at one of the highest-rated brokerages where you always retain full control and have the protection of SIPC insurance. Hedgewise simply executes trades on your behalf in the account. Even if Hedgewise went out of business tomorrow, you could simply resume control of your assets.

We usually benchmark the performance of each of our products to that of a large competitive fund to transparently demonstrate its benefits. We also publish white papers that clearly explain our investment logic so that you can easily decide for yourself it makes sense.

Finally, the founder of Hedgewise has all of his own assets invested in Hedgewise products. We literally take care of your money as if it was our own.

Disclosure

This information does not constitute investment advice or an offer to invest or to provide management services and is subject to correction, completion and amendment without notice. Hedgewise makes no warranties and is not responsible for your use of this information or for any errors or inaccuracies resulting from your use. Hedgewise may recommend some of the investments mentioned in this article for use in its clients' portfolios. Past performance is no indicator or guarantee of future results. Investing involves risk, including the risk of loss. All performance data shown prior to the inception of each Hedgewise framework (Risk Parity in October 2014, Momentum in November 2016) is based on a hypothetical model and there is no guarantee that such performance could have been achieved in a live portfolio, which would have been affected by material factors including market liquidity, bid-ask spreads, intraday price fluctuations, instrument availability, and interest rates. Model performance data is based on publicly available index or asset price information and all dividend or coupon payments are included and assumed to be reinvested monthly. Hedgewise products have substantially different levels of volatility and exposure to separate risk factors, such as commodity prices and the use of leverage via derivatives, compared to traditional benchmarks like the S&P 500. Any comparisons to benchmarks are provided as a generic baseline for a long-term investment portfolio and do not suggest that Hedgewise products will exhibit similar characteristics. When live client data is shown, it includes all fees, commissions, and other expenses incurred during management. Only performance figures from the earliest live client accounts available or from a composite average of all client accounts are used. Other accounts managed by Hedgewise will have performed slightly differently than the numbers shown for a variety of reasons, though all accounts are managed according to the same underlying strategy model. Hedgewise relies on sophisticated algorithms which present technological risk, including data availability, system uptime and speed, coding errors, and reliance on third party vendors.

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